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Description

Pretium Resources Inc are a gold focused mid-tier producer with one mine in development in Canada and one exploration property. They have approximately 30Moz. of gold in the reserves and resources category of which 15Moz. are in the measured and indicated category. They have a market capitalisation of ~$2002.2M which is a rise of roughly 28% over the last three months. As of 09/04/2017 they have ~$400M debt and ~$12M cash. They have 181M shares outstanding and trade on the New York Stock Exchange and the Toronto Stock Exchange.

Notes

Pretium Resources was formed by purchasing two large projects from Silver Standard Resources (now SSR Mining).

There was some controversy with this stock in 2013, when their contractor (Strathcona) quit and made an accusation that the Brucejack bulk sample did not prove that the reserves existed, due to the thin nuggety veins. This proved false, with the bulk sample meeting expectations after Strathcona left. The stock crashed to $3 per share in October 2013, but has since rebounded. Until they begin mining and meet their grade expectations, there will be some doubts. However, recent infill drilling has been very impressive with very high grades.

2013 feasibility study for gold production at 400,000 oz (14 gpt for first 10 years) and silver production of 350,000 oz (12 gpt) in 2017. 18+ year long life mine.

In September/October 2013 when they began the Bulk Sampling there was a controversy regarding the grade. The stock price dropped from $10 to $3.20 because of uncertainty.

The Bulk sample did find the expected 4,000 oz. Now the legal issues are gone. The stock has jumped back up over $5 per oz.

Funded and permitted for production in 2017.

The resources do not include all of Snowfield, so they are understated and probably undervalue the company.

The resources do not include the silver, but silver is reflected in the low cash costs.

Gold Price (last analysis) ($)

1320.00

Silver Price (last analysis) ($)

17.50

Stock Price (last analysis) ($)

8.34

1 Yr Stock Price High ($)

12.40

Stock Price Change From 1 Yr High (%)

-30%

Stock Price USA 5-Year High ($) (including date)

$13.60 - 3/4/2011

Stock Price USA 5-Year Low ($) (including date)

$3.00 - 11/20/2013

People (wag)

Excellent Management Team. CEO Bob Quartermain is one of the best in the business.

Mine Locations

Canada: British Columbia

Local Issues (wag)

Ownership

100%

Country of Incorporation

Canada

Gold Properties

Two monster properties next door to each other on 220,000 acres.

BruceJack has 20 million ounces of gold and 150 million ounces of silver. They currently plan to mine 8 million oz, but that should increase over time.

Snowfield has 35 million ounces of gold and 125 million ounces of silver. But this project is very low grade is not likely to be developed until the end of decade.

Their first mine is under development at BruceJack. It is actually two underground deposits: Valley of Kings (VOK) and West Zone that are next to each other. These two deposits have 15 million oz of gold (12 gpt) and 30 million oz of silver (12 gpt).

The capex is $800 million and the IRR is 30% after-tax at $1300 gold. The plan is to produce 400,000 oz at 12 to 14 gpt with all-in costs at $500 per oz.

The recovery rates for their first mine at BruceJack are very high for both gold and silver (95% and 92%).